Tokyo rubber futures rose on Thursday as slight falls in the yen against the dollar and expectations of potential supply concerns prompted short-covering after slipping nearly 3 percent the previous day. The benchmark Tokyo Commodity Exchange rubber contract for June delivery opened up 2.1 yen or 0.7 percent at 292.2 yen per kg from the previous day.
On Wednesday, key contract fell by the daily 8-yen limit to 290.1 yen. The daily limit has been widened to 12 yen from Thursday for all contracts except for the front-month January contract, which is limitless. Japanese rubber futures prices were supported because of expectations over potential supply tightness in key producing countries, traders said.
Thailand, the number one producer, and Malaysia, the third biggest, were expected to enter the wintering dry season, when rubber trees produce less latex, at the end of February. But the season could start earlier in Thailand this year with rubber trees in some Andaman coastal areas already starting to shed their leaves, signalling that rubber output would fall soon.
Falls in the yen against the dollar helped lift Japanese rubber prices. The dollar gained against the euro on Wednesday after a European Central Bank official warned that growth in the region could be slower than expected. The dollar was trading at 107.40/45 yen after dipping to a 2-1/2-year low of 105.93 yen on Wednesday.